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The Big (and Profitable) Changes in MLPs

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

From the Editor: Shares of MarkWest Energy Partners (NYSE: MWE) are up 63% since Kent recommended them in Energy Advantage. Genesis Energy LP (Nasdaq: GEL) is up 71%. But the MLP market is about to get much more interesting, according to Kent. That's why he's targeting the "clones" now...

From the tax advantages to their high-paying yields, it's hard to beat the returns of a Master Limited Partnership (MLP).
And the good news for us is that this market is about to heat up again, especially when it comes to energy-based MLPs.
You see, the shape and focus of these MLPs is changing fast and for the better - even though it hasn't drawn much attention outside of these pages quite yet.
However, don't expect all of this to remain under the radar for too much longer.
In fact, new "MLP clones" are beginning to emerge that are going to hand us some interesting investment options in the coming months.

For MLP investors, what is about to hit is really something quite new...

Start Seizing Master Limited Partnership (MLP) Profits

By , Money Morning -

Last week, Kent challenged me to offer you a way to make some money in energy.

I started scanning the energy and agricultural stocks I monitor, and began combing financials, looking for some undervalued little company about to pop.

Then I stopped.

I already knew a failsafe way to ace Kent's challenge. And so do you. We talk about it all the time.

It's the midstream sector of the energy supply chain, particularly in Master Limited Partnerships or MLPs

And it's the best and easiest way to make money in energy today.

I want you to understand the value of these companies that are involved in the gathering, transport, and storage of oil and gas. Not in terms of just how important they are to the industry, but also how important they can be to generating very strong returns for your wallet.

Because if you're ignoring them, you're missing out.

Big time.

That's why today I'm going to share with you one investment opportunity in Kent's Energy Advantage portfolio that is blowing the doors off and making investors a killing.

And you can join in.

MLPs: The Golden Age Continues

The United States is in the early stages of one of the greatest financial booms in its history.

Technological advances in horizontal drilling have allowed companies to access natural gas and oil resources once thought to be unattainable.

Upstream gas drillers continue to develop shale deposits in Pennsylvania, New York, Utah, and other states. So someone has to take care of all the gathering, feeder and transport pipelines, terminals, storage facilities, fractionating, and initial processing of these fuels.

This is what has made Master Limited Partnerships (MLPs) such attractive opportunities.

These midstream companies make their money by charging transport fees for the fuels they process. And over the past few years, these fees have remained almost constant, even though natural gas prices have dropped considerably.

MLPs offer investors the opportunity to make profits in two ways.

  • The stock appreciates in value, due to growth in the sector and strong financial returns.
  • The stock pays higher-than-average yields and quarter distributions to investors (otherwise known as dividends).
The yield benefit is driven by the fact that all company profits are distributed directly to partners and the investors, bypassing corporate taxes.

And when we identify MLP plays that do both at the same time, that's when we really start to see some profits.

A 139% Return in Under Three Years

MLPs are attractive investments. So are the indices that track their overall performance.

And for the last 18 months, Energy Advantage readers have benefited from growth of one fantastic index.

The JPMorgan Alerian MLP Index ETN (NYSE: AMJ) tracks the performance of the booming energy MLP sector. Created in 2009, the market cap-weighted index currently pays an attractive yield of 5%, while the underlying share price has doubled in a little less than three years.

The index offers many of the same benefits of investing in a traditional MLP. The two biggest benefits are those opportunities to acquire a strong yield and to reinvest those dividends into appreciating shares.

This two-step process unleashes the power of income investing.

Just how much potential are we talking about?



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